Community Currencies

Community currencies are alternative monetary systems which are used within a specific locality and serve as a complement to national currencies. These currencies are often designed to enhance the local economy, encouraging residents to spend money locally, thereby increasing the economic resilience of the community.

Characteristics

Community currencies come in various forms, including physical scrip, tokens, or as digital accounting entries. They are typically issued by local organizations, non-profits, or private entities, and can be used as substitutes for government-issued fiat money. These currencies are usually exchanged for legal tender at participating banks or directly from the issuing organizations. Because their use is limited compared to regular cash, community currencies are often circulated at a discount, incentivizing their use.

Types of Community Currencies

1. Local Exchange Trading Systems (LETS): These are local, non-profit exchange networks in which all ledger entries are considered as units of local currency, facilitating indirect bartering among participants.

2. Time-Based Currencies: In time banking systems, participants exchange hours of labor instead of currency, which can enhance social capital by promoting community service and mutual assistance.

3. Demurrage Currencies: These are designed to lose value over time, encouraging immediate spending rather than saving, thereby stimulating the local economy.

Purpose and Benefits

Community currencies aim to achieve several economic and social goals:

• Economic Localization: By keeping money circulating within the community, these currencies support local businesses and promote local ownership.
• Social Cohesion: Community currencies can foster stronger community ties by encouraging collaboration and mutual support.
• Economic Resilience: In times of economic downturn, community currencies can help maintain trade and economic activity within the local area.

Global Examples

Community currencies have been implemented around the world in various forms. In the United States, examples include the Ithaca HOURS and BerkShares. In Canada, systems such as the Billet Local d'Échange have been established, and the United Kingdom has seen the use of currencies like the Bristol Pound.

Related Concepts

• Complementary Currency: These are alternative currencies used in conjunction with national currencies, often with similar objectives as community currencies.
• Digital Currency: While community currencies can be digital, digital currencies generally have a broader scope, often extending beyond local use.
• Barter System: Community currencies can act as a modern form of bartering by facilitating transactions without the need for a national currency.

By encouraging local spending and enhancing local economic systems, community currencies have emerged as important tools for economic empowerment and social solidarity in communities worldwide.